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Financial Market Integration and Income Inequality

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  • Jae wook Jung
  • Kyunghun Kim

Abstract

This paper uncovers novel empirical evidence that financial market integration and financial market development interact to change income inequality. When other things are controlled, the effect of financial market integration on income inequality depends on financial market development. In a country with underdeveloped financial market, income inequality gets worse as financial market opens. On the other hand, when financial market is highly developed, the effect of financial market openness on income inequality is mostly insignificant in a statistical sense. The results are still valid with different measures of financial market development, integration, and income inequality. We check that the results are robust as an endogeneity issue among financial market development and integration is controlled.

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  • Jae wook Jung & Kyunghun Kim, 2018. "Financial Market Integration and Income Inequality," Working Papers id:12916, eSocialSciences.
    • Handle: RePEc:ess:wpaper:id:12916
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    2. Montes Rojas Gabriel & Carrera Jorge & Panigo Demián & Solla Mariquena & Toledo Fernando, 2023. "Income Inequality and External Wealth of Nations," Asociación Argentina de Economía Política: Working Papers 4675, Asociación Argentina de Economía Política.

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    More about this item

    Keywords

    eSS; Financial market development; financial market integration; Income inequality; endogeneity issue;
    All these keywords.

    JEL classification:

    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development

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